Interim Sector | Market Update

Each quarter, we will summarise our current view of the market and the implications for interim executives, which we hope you find useful.

Many thanks to my colleagues and sector Partners at Odgers Berndtson Australia - Sean Garvey (Technology), Mark Sloan (Infrastructure & Industrials), Jonathan Harper (Risk & Compliance), Toby Gardner, (Financial Services), Tom Mutch (Government & Boards), Jane Harlen, Paul Hill, Caroline Dever and Jenny Sutton (Public Sector and  Education) and Phil McCann (CFO & Finance).

 

Higher Education

• The education sector faces a perfect storm of challenges, with coronavirus negatively impacting international student revenue, new challenges for learning delivery models, and the uncertainty regarding the continuity of many research programmes. As such universities are needing to think deeply about their purpose, current and future service offerings and the required resources to support their full operations.
• In the first instance, universities are looking at significant cost savings.  With salaries making up the majority of operational costs, universities will pause many new hires, choosing to either redistribute staff internally or make changes to the services and programmes being undertaken. Several universities have outlined their change management plans with a view to decreasing a number of FTE staff. Casual staff will be greatly affected.
• The search market, however, is still active to a degree with essential senior executive level or highly specialised roles going to the market.
• The focus for recruitment/search processes tends to be on the Australian and New Zealand markets, due to the challenges securing international visas, as well as Australian border closures and quarantine requirements.
• We expect university executives to continue their focus on strategic planning and changes to education offerings between now and early 2021.  The wellbeing of staff is of importance as universities move through internal staff re-organisations.
• There have been several new Vice-Chancellor appointments during 2019 and 2020. All leaders within the Higher Education sector will not only focus on forward growth but will also be emphasising consolidation and operational excellence.
• Technology will play a critical part in future learning models. It will require further investment in infrastructure, people and capability. It is likely to be high on the agenda for universities as they transform their operating models and consider future core offerings to meet the needs of both domestic and international students.  
• We anticipate recruitment activity in 2021 to increase with emphasis on senior/executive academic leaders and senior corporate services roles across finance, technology infrastructure, digital and human resources.

Implications for the Interim Market

• Functional roles within universities across human resources, technology, finance and general management have significantly reduced.  However, there have been opportunities for very senior interim academic leaders to be placed in roles where the existing “bench strength” is not sufficiently strong to manage the upcoming structural and financial challenges across universities.
• Some Vice-Chancellors are actively engaging their networks and Odgers for these critical interim appointments.
• We expect that the functional interim market will be more positive from the fourth quarter of 20\21. 

 

Government & Board

• Recruitment activity across State governments has been severely curtailed whilst agencies manage the current crisis.
• There has been significant deployment of existing staff to manage and operate critical coronavirus activity (i.e. tracing), rather than recruiting externally.
• The upcoming Queensland election and current state of emergency in Victoria has resulted in minimum recruitment at mid to senior management levels.
• Board activity across Government and not-for-profit remains robust however, as will ASX Board recruitment in the first half of 2021.
• The Federal Government and agencies are focusing heavily on digitisation of key services, risk management and cyber security.  The majority of the significant ERP implementations will be completed in the next 12 months.
• We are seeing a significant reduction in demand for technology project and program leaders in the State and Federal governments, for those roles above $200K.

Implications for the Interim Market

• There has been some activity, however primarily for government agencies and statutory bodies, and for key service delivery roles with a technology focus.  Whilst demand for front line service providers should increase, the interim executive market is likely to remain quiet for the next six months or so.

 

Infrastructure & Industrials

• Mining services and technology focused businesses are generally performing strongly.
• Regulated assets such as ports and utilities are also performing soundly.
• Major construction and infrastructure projects continue, and several key projects are currently re-tendering for the next construction project stages.
• Services business are doing well, however there has been considerable consolidation of divisions and executive teams, increasing the pool of executive talent in the market.
• Logistics business, critical to the supply chain, are “booming”.

Implications for the Interim Market

• There are opportunities for senior operational interims to assist regulated asset operators in Australia and for those who require senior talent to manage offshore assets. Project and program management demand has decreased, and demand is not likely to return until the second half of 2021.
• Some major industrial and utilities businesses have remained relatively unaffected by the current crises and there is a continued demand for senior interim leaders across finance and technology.

 

Financial Services

• Significant change continues at the Board and C-Suite level, due to the impact of regulatory, economic and cultural considerations.
• Permanent hires across mid to senior management levels are significantly lower than pre-coronavirus levels, due to a propensity of larger organisations to retain staff through the pandemic and source from within. Big4 and other consulting firms impacted by lower utilisation have also created significant supply in the market by offering interim secondment solutions to permanent hires at highly attractive rates.
• Our clients are reviewing processing models and delivery, recognising that offshoring of some critical processes is no longer as desirable from a risk, security and service delivery perspective. Business critical tasks are being brought back “on-shore” or being automated.
• Project spend is moving from compliance activity to digitisation of customer processes, with a pause on “big tech” implementation. The demand for digital skills and experience is creating opportunities for lateral hires from customer centric industries into financial services.
• Cost reduction continues to be a core focus as margins are impacted, and consolidation is accelerating across the several subsectors such as superannuation, where economies of scale are expected to deliver better outcomes.
• Despite the pandemic, M&A activity is also increasing as the banks continue to divest non-core assets, and private capital seeks out opportunistic acquisitions in the market.

Implications for the Interim Market

• Whilst recruitment across the tier one financial institutions has been significantly curtailed, opportunities exist across funds management, regulatory agencies and credit unions, smaller banks and payment providers.
• There is currently a large available pool of project and program managers and candidates need to think carefully in relation to their value proposition with potential opportunities.

 

CFO & Finance

• Many companies have been holding off hiring due to coronavirus, for almost too long, and need to make some senior hiring decisions in the next three months.
• There is some upcoming activity for CFO’s in the ASX top twenty, yet to be announced to market.
• The current reporting season has been poor, and this will translate to the acceleration of key hires that may have occurred earlier this year if not for coronavirus.
• There is increased M&A activity as some business are operating in a position of strength compared to their competitors.

Implications for the Interim Market

There appear to be limited opportunities for senior finance executives across government agencies as a result of significant consolidation of operations and reduction in senior executive positions.  There is also limited activity across higher education, however greater opportunity in service delivery agencies (particularly Health).  As the turnover of ASX CFO’s accelerates towards the end of the calendar year more opportunities will arise with those direct reports of finance leaders.  There is continued opportunity with utilities and those businesses driving supply chain operations and with major asset operators.

 

Technology

• Senior opportunities in Australia for global technology vendors have decreased, however some Australian software vendors are on major growth paths.
• Opportunities exist domestically and offshore for leaders across sales, senior account management and product development.

Implications for the Interim Market

• Vendors historically have had low engagement with the interim market. However, there is increasing activity in Australian tech, across both PE-backed and listed organisations.
• CTO, product and corporate overhead functions, which are increasingly based in Australia, may need an interim for transactional purposes.
• As the path to growth is usually offshore, some businesses may benefit from strategic advice from those who can help them scale.
• The CIO market and first reports, whilst still active, is benefiting from an increasingly large candidate pool. As such clients are able to be highly specific in their candidate requirements regarding sector and technical expertise.

 

Risk & Compliance

• Currently the large financial services institutions are doing “more with less”, utilizing spare capacity and internal resources rather than hiring in.
• However, insurance and the super funds will be under increasing regulatory attention.  A regulatory focus will be on investment risk, both on and offshore, and level of investment risk.  Infrastructure investments in particular, may be carefully reviewed.
• The major financial institutions who have been under significant regulatory scrutiny have largely operationalized their key compliance processes, but these will be continually refined.

Implications for the Interim Market

• As a result of the above trends, regulatory affairs professionals and corporate relations professionals should be in increasing demand, particularly servicing insurers and fund managers.
• There is a talent shortage of risk and compliance expertise.  As there is reduced scope to acquire talent from the regulators and public sector, high performing incumbents are being appropriately remunerated, this shortfall is likely to continue.
• Some of the large professional services firms are facilitating secondment of their consulting teams to major clients to deliver key projects.
• Business continuity and business resilience is a continuing focus and potential for interim resources.
• There is a surfeit of project and program managers. Some major financial institutions have significantly reduced their programs of work (particularly relating to major technology investment/projects).

We welcome your feedback on the current market.  If there is anything you would like to highlight for our next update, please feel free to let me know.

Best wishes

Martin Searle
Partner
ODGERS INTERIM - ODGERS BERNDTSON